Let’s dance: Universal, YouTube talk music site

It’s no sure thing a deal will get done, of course. One source told Reuters that negotiations have “literally” just started and key details, like financial terms, are still undecided.

Still, at first glance, this seems like it could be one of those win-win deals and both sides would probably be smart to work out an arrangement.

For Google, it would mark one way in which they could pull some revenue from YouTube, which it has been seeking to do given its $1.65 billion investment in the site. It would also help smooth over sometime rocky relations with the media industry, while avoiding future disputes like the one it now has with Warner Music (Late last year, after negotiations broke down, Warner demanded that YouTube pull down all music videos on the site featuring its artists).

And for Universal? It lets the music label showcase (in a protected environment) videos from artists like U2 and the Killers — and that’s no small thing when you’re scrounging for all the album sales you can get. What’s more, a deal could finally create a way for music labels to start making more money from videos (presumably, there would be a revenue-sharing deal from advertising that YouTube would sell).